Problem Solver: Small credit blip has huge impact

A $72 discrepancy was going to cost Oak Park couple $36,000 on their refinanced mortgage

February 16, 2012|Jon Yates' "What's Your Problem?"

Mary Gearing's credit history was dinged by a late payment on her husband's old Capital One credit card after the card was canceled. (Alex Garcia, Chicago Tribune)

When it comes to your credit history, even the tiniest blemish can have a huge impact.

Just ask Mary Gearing.

Last spring, Gearing and her husband, Adam, decided to consolidate their Capital One credit cards. The Oak Park couple reasoned that it made no sense for them both to have accounts with the same credit card company, so Adam Gearing called Capital One and canceled his card.

It wasn't until the Gearings received a call from Capital One in May that they realized something had gone wrong: a $72 recurring payment was charged to Adam Gearing's old account.

Because he had stopped checking his online statements, he had no idea the charge existed. By the time Capital One called, the charge was 40 days past due.

Mary Gearing said she spoke to the representative and explained that the account had been closed. She said the representative apologized, waived the late fee, and sent a letter verifying the account was in fact closed.

Gearing paid off the $72 and figured everything was fine.

When the Gearings went to refinance their home loan earlier this month, they were met with some disturbing news. Their mortgage broker pulled up their credit history and reported it was pristine except for one late payment — the $72 charge reported last spring by Capital One.

The ramifications were huge. The broker told her that the blemish disqualified the couple for a 4 percent rate on a 30-year loan. With that one ding on their credit report, the best the couple could hope for was a 4.375 percent rate.

Mary Gearing quickly did the math. The monthly payment on a loan at 4.375 percent was $100 more than the payment on a loan at 4 percent. Over 360 months, the Gearings would pay an additional $36,000.

Gearing said she called Capital One and explained the situation.

A supervisor got on the phone and looked through the couple's file, Gearing said. The supervisor agreed Capital One had messed up, and promised to submit a request with the credit bureaus to remove the blemish, Gearing said.

One problem remained. The process to remove the bad mark could take months, Gearing was told. To get the 4 percent mortgage rate, she needed immediate action.

"All I need from them is a letter saying, 'We are in the process of deleting this from your credit history,'" Gearing said. "The guy was like, 'We can't do that.' I said, 'Why?' He said, 'Our system doesn't have anything like that.'"

Frustrated and worried she would lose out on the 4 percent rate, Gearing emailedWhat's Your Problem?

"It's $36,000 for a $72 discrepancy. I'm so furious about it," she said. "You're talking to these people who are so inept at dealing with anything outside the norm."

The Problem Solver contacted Sukhi Sahni, a spokeswoman for Capital One, on Monday.

Sahni said she could not comment on the Gearings' situation, but she did pass the couple's story to the appropriate people at Capital One.

The next day, a Capital One representative contacted Gearing to say the credit card company would send both her and her mortgage broker a letter confirming it will remove the delinquency from the credit report.

"It brings our credit history back up to the highest it can be, which is really huge," Gearing said.

One hurdle remains — a conference call between her, Capital One and the company that will make the adjustment to the credit report — but Gearing believes that will happen by Friday.

Her mortgage broker told her she will qualify for a rate very close to 4 percent.